Scania head of sustainability talks BEVs, hydrogen and green vehicles as a service

As part of the COP26 climate change conference in Glasgow, Scania held a one-day conference at its new Eurocentral flagship dealership to the east of the city to review road transport’s progress towards net-zero emissions. MT caught up with Scania’s global head of sustainability Andreas Follér at the event.

MT: While the focus now is on net-zero emissions by 2050 or maybe 2040, first you have to achieve the EU’s Vecto targets of a 15% cut in CO2 emissions by 2025 and 25% by 2030. How will Scania do that to avoid being fined?

AF: We will meet our targets with a good margin. We are aiming for 10% of our volumes by 2025 being electrified which will make a big contribution. But we are also improving the efficiency of our combustion engines and they will make a big cut in emissions from our 2025 vehicles. It will be a double digit reduction – we often hear that combustion engines have reached the limits of thermodynamic efficiency but our answer is ‘we will still surprise you’.

When it comes to 2030 we will stick our chin out and say, providing other adjacent sectors such as infrastructure and policy makers do their part, we will reach as high as 50% electrified.

MT: Now the UK is outside the EU do the Vecto targets still apply here?

AF: I believe so but for us it doesn’t really matter because we have a global product and we won’t be developing a UK truck. It is important that countries follow the same path on this because it is troublesome when there are too many discrepancies in legislation.

MT: Where is the UK in the European league table for electrification of trucks?

AF: It is difficult to say but I reckon the UK is in the top half. We have some countries running really fast – we will see above 50% in the Nordic markets by 2030 and the new government coming in in Germany is doing a lot of good work.

MT: Will take up of electric vehicles in the UK be slowed by the lack of charging infrastructure which is out of your hands? How will you decide which countries get the limited quantities of electric vehicles available?

AF: I wouldn’t say it is out of our hands. With the information we gather from our connected trucks we can advise on where the infrastructure is needed. We are also tailor-making depot charging for our customers so you can already get a package with the electric truck and the charging infrastructure that goes with it. But if we are talking scale we need also public infrastructure.

When it comes to availability Scania has always produced on demand not on speculation. It will be part of our normal decisions; we have a forecast production and will put the BEVs where customers will buy them.

MT: In what weight range do you see electrification coming first – medium or heavy trucks?

AF: We are putting our efforts across the board. Today we have a BEV for urban applications that can run for 250km. By 2023 we will have a regional haul BEV able to carry 40 tonnes, run for four hours at highway speed and recharge in 45 minutes. The next step will be the big trucks and we are looking at construction, mining and timber – all those applications will have products by 2025.

We have a customer, SCA in Sweden, carrying timber on a double trailer at up to 80 tonnes gross weight and we are going to electrify that vehicle. It is a very predictable route between the port and their paper mill. It is beginning to feel like a myth that BEVs will only be for urban applications and only able to carry light loads. It is really going to be in the heavy sectors and those are the ones that will pay off early. The more you use the vehicle, the longer the distances and the higher the utilisation the earlier you will get to that break point where you repay the investment.

MT: Looking at the 8x4 25L here at the conference it has a lot of batteries so there must be a trade off between range and payload.

AF: Batteries follow Moore’s Law so by 2030 we will have more than halved the weight of the batteries without affecting capacity. So yes there is a trade off but it will still be a fantastic TCO machine.

MT: Are there enough batteries to go around?

AF: We have already secured our batteries up to 2030. Our principal supplier will the Swedish company Northvolt, which is 100% powered by renewable electricity and will take the lead in recycling lithium cells because they will still have a value after a couple of user cycles and then we can really cut the environmental impact of batteries. It is a relevant question because we are not on the winning end of the situation with semiconductors which are going to iPhones and computer games first. When it comes to battery cells I don’t hear the same concerns and the volume increase of battery cell producers is really promising.

MT: What proportion of the cost of a BEV is in the batteries and will Scania sell or lease them to operators?

AF: Batteries are by far the most valuable item on the truck. The batteries last a long time – we were concerned a few years ago that we would have to switch the batteries during the lifetime of the truck but it doesn’t look that way now. That doesn’t mean we won’t explore different business models because it is a big investment for customers and if we can help them and mitigate the risks and costs we will explore that. Right now we are selling or leasing the whole vehicle with the batteries.

MT: Will rapid charging shorten battery life?

AF: I’m not an expert in this but it doesn’t seem to be that way. When we look at cars that have been charged slowly overnight and those that have been fast charged there doesn’t seem to be as much concern as before.

MT: What role does Scania see for hydrogen in the medium and long term?

AF: It will play a role and one reason is that there is a critical mass who believe it will play a role. When it comes to some applications it might make sense. One example is coaches which we believe would be a good fit for fuel cells because they want to go for hours and hours with two drivers and short breaks.

When it comes to the bulk of the segments we serve we believe that battery electric will be a better fit and a wiser use of energy. You need two thirds more energy to power a fuel cell truck and you need the renewable energy to make the hydrogen, you need to store it, you need to fuel it and convert it back to electricity. In all these steps you lose energy and compared with battery electric it is difficult to see how that equation works out.

As long as there are drivers – and we believe there will be drivers for a long time – they need to rest every four and a half hours and that is the perfect time charge a battery for half an hour or 45 minutes. Those periods will get shorter as batteries get better over time and most of our customers have fairly predictable routes between DCs and depots so they will have ample chances to charge batteries. So for all these reasons we believe that batteries are the promising technology for the bulk of our customers.

MT: En route charging will however need more public infrastructure which is out of your hands.

AF: That is why we with Volvo and Daimler are investing €500m in our charging network. Call that frustration or just good business sense. The decisions we take today will impact on our journey 10 years from now.

MT: We have been hearing about plans for small modular nuclear reactors in the UK – is it far-fetched to imagine a nuclear reactor on hubs capable of charging 100 electric trucks?

AF: Scania does not have a position on nuclear energy! Sweden will keep the reactors we already have as long as possible but will probably not build new ones. In theory I don’t think it is impossible. If there are hundreds of trucks parked together and if they are all going to charge at 1MW that may need a small nuclear plant. I do not under-estimate the challenges we are facing when it comes to charging infrastructure.

We need to work together to choose a dominant infrastructure and just go for it.

MT: Are you worried that when the barrier of Euro-6 keeping out the giant Far Eastern manufacturers comes down we will see a huge influx of cheap Chinese electric trucks?

AF: No. We think the opposite right now. We are making a massive investment to create a third industrial hub in China as we believe that a modern transport system needs premium quality, reliability and durability because the priority is uptime. We are not worried and we are ready for competition.

MT: How will Scania differentiate itself from its competitors in the world of electric trucks?

AF: We will have the same USP we are known for today – we are close to our customers, we understand their needs and pain points and we can provide them with the best value. When it comes to the things where we have been very successful in the last few decades – combustion engine technology and the cab – those will be less and less differentiating factors. But I believe Scania will be the leader in what we are still calling fuel efficiency or energy efficiency and that is what matters.

MT: Scania has just opened this £10m dealership here at Eurocentral – it is a cathedral for the diesel engine! What will it do when battery electric becomes mainstream?

AF: Let me be a visionary for a moment. We will see over the air updates and upgrades for software – but what about the hardware? What about building on our modular system in the future not only for building trucks but for the disassembly of trucks? What if we can provide for our customers to come in and have their trucks refurbished and even remanufactured at our dealerships?

Our workshops could almost be part of our industrial system. We have 1,600 around the world – wouldn’t it be fantastic from a sustainability perspective to have 1,600 remanufacturing micro-plants? The lifetime of these vehicles will keep getting longer but there will still be parts that need attention. With remote diagnostics we will know in well ahead before we take the vehicle in so we can refurbish it and make sure it is perfect again. Uptime will be as important in future as it is today.

MT: Operators have sought to derisk their investment in trucks by moving towards contract hire with full R&M – will that trend increase with BEVs?

AF: We are happy to do that and we are now looking at some exciting set ups where we can also bring in transport buyers to the mix. If they are really serious about decarbonising their flows they could commit to certain volumes of fossil-free tonne-kilometres and we could potentially provide the operators with a vehicle-as-a-service solution. The challenge in all this is on whose books do the vehicles and the risk sit. That is where I believe we could find financial players who would come in and take some of that risk. What the finance community is looking for in this decade is green investments and to invest in green fossil-free transport fleets is a conversation worth having.

MT: Will we see a pence per kilometre model used to pay for tyres come in for electric vehicles?

AF: Yes - we already have that model in our rental business but we can do even more.

MT: Thank you for your time.